House GOP seeks ‘conversation’ about state income taxes

House Republicans hope to advance an alternative way for Iowans to file their state income taxes, but Republican Governor Terry Branstad says the reality is Democrats in the Iowa Senate won’t go for the idea.

Nonetheless House Speaker Kraig Paulsen, the top Republican in the legislature, says Republicans in the House want to “have a conversation about income taxes.”

“We’ve tried to have that conversation for several years now,” Paulsen says. “We’ve sent several proposals over to the senate and we have not had any success on landing on an idea that we can get to the governor’s desk.”

Iowa’s top income tax rate today is just under nine percent. One plan Paulsen and other Republicans have favored would allow Iowans to file under the present system or to opt pay a “flat tax” of 4.5 percent on their income.

“We think that makes the state more inviting to employers and to individuals to come and invest in the state of Iowa and invest in our workforce,” Paulsen says.

Branstad will lay out his priorities for the 2015 legislative session next Tuesday, but income tax reform won’t be on his list.

“I believe in recommending things that have a realistic chance of getting bipartisan approval and I don’t see that as something that’s going to happen this session,” Branstad says.

While Branstad supports the idea of a flat tax that would lower Iowa’s top income tax rate, the governor says key Democrats like the long-time chairman of the Senate’s tax-writing committee will not even consider it. Democrats say a “flat” state income tax of 4.5 percent would be a big tax break for upper income Iowans. Senate Democratic Leader Mike Gronstal says Democrats are interested in making the tax system fairer, to help more Iowans move into the middle class.

“We have always been open to discussions about targeted tax relief that will help grow Iowa’s economy,” Gronstal says.